Japan's Shin-Etsu Chemical Co plans to spend about 2 billion yen (US$25.9 million) to build a plant in Vietnam to process rare-earth metals for use in hybrid vehicle motors and other products, the Nikkei reported, citing company sources.

The plant, which is expected to process 1,000 tons of rare earths annually, would be Shin-Etsu's first such facility outside Japan and is slated to come onstream in February 2013, the Japanese business newspaper said.

The Vietnamese operation will raise the company's extracting and refining capacity 50 percent, and is likely to help reduce its reliance on China for raw materials, the daily said.

Shin-Etsu, the world's second-largest producer of rare-earth magnets, will supply the plant with spent magnets recovered from hybrid vehicles, hard drives and other items, as well as leftover materials from its rare-earth magnet factory, the Nikkei said.